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Germany’s strength, in my view, is its manufactured goods export sector. I don’t know why they are so good at building BMWs and turbines, but my hunch is that it isn’t fiscal stimulus. It probably has more to do with an educational system that has a technical skills track, and which doesn’t bore normal boys out of their minds in a futile attempt to use schools to create an egalitarian society.

I’ve talked to people about that idea before. But their impression was German technical schools are rather dreary places, were students are frustrated by being relegated to 2nd class status. But now I want to look into that more. Second class status is frustrating, but so, I imagine, is 10-15% unemployment rate. (Which is what it’s at for non-college educated worker looking for jobs. For college educated workers it’s only 5%.)

7. At some sufficiently high debt-gdp ratio, it becomes a foreign policy issue and a big one. Postwar UK had a high debt to gdp ratio, and to this day it is a fine place, but that debt meant the end of England as a world power, for better or worse. The U.S. for instance used financial issues to push England around and they basically had to give up on their overseas commitments. A very high debt ratio here would mean the end of the U.S. as a global world power, again even if gdp does OK. A global power needs the option of spending a lot more, quickly, without asking for anyone’s permission. Your mileage on a U.S. retreat from the global policeman role will vary, but it’s the elephant in the room which hardly anyone is talking about.

Cowen is usually a very clear thinker, and he has a point. Being the global policeman costs a lot of money, and we often act like it doesn’t.